On Monday the 19th of October, the Minister for Finance announced Malta 2021 Budget. Whilst this budget catered for more than 6 sectors, namely: social measures, the economy, infrastructure, education and health, environment, law and order, it is evident that the country’s main priority for 2021 is steady economic recovery from the effects of the COVID-19 pandemic.
Malta Economy overview
The blooming Maltese economy which has been negatively affected by the COVID-19 pandemic in the beginning of 2020 is expected to fully recover by the end of next year. As per the official forecast of European Commission based on in-depth analysis of the economy, the local GDP annual growth has dropped to -6%. However, the easing of restrictions in the second quarter of the year together with the steady return to business-as-usual is expected to positively influence the economy and push GDP growth by 6.3% in 2021.
Main highlights of the Budget 2021:
- No new taxes were introduced and imposed for the 4th consecutive year.
- Income tax refunds will be increased up to 80€ for single individuals and up to 95€ for spouses.
- Wage supplement is to be extended for eligible businesses affected by the COVID-19 pandemic until March 2021.
- Government to distribute another round of 100€ vouchers for each resident and which are to be spent on leisure, hospitality and retail.
- VAT exempt threshold for businesses to increase up to €30,000 and in particular benefiting SMEs and self-employed persons.
- Further extension of the First Time Buyers and Second Time Buyers Schemes in terms of the property value which is to be exempt from VAT.
- Extension of stamp duty reduction on the purchase of immovable property from 5% to 1.5% on the first €400,000 if the promise of sale of such property is to be signed until March 2021 and the final deed of sale is signed until December 2021.
- €9 million to be allocated to public sector workers in order for them to be compensated for injustices.
- More attention and focus on the island’s infrastructure by investing in the improvement of roads and health facilities.
- A long-term strategy for the regeneration of the tourism to be announced.
- Investment schemes aimed at attracting foreign investors are to be revised and extended.
- The possibility of holding civil court proceedings online via video streaming.
What’s in it for foreign investors?
- Business Innovation Scheme: In 2021 the new scheme will be introduced to companies consisting of less than 50 employees. This scheme will support businesses in technological investments and also aimed to assist them in identifying new potential markets while employing qualified people. The scheme will cover up to 50% for a maximum of EUR 200,000.
- “Green Bonds”: the Government of Malta will be issuing a new attractive package for investors with the hopes of raising funds which are to be used for environmentally-sustainable and eco-friendly projects.